Emergic: Rajesh Jain's Blog

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TECH TALK: Entrepreneurial Learnings: Don’t Forget The Indian Market

July 20th, 2001 · No Comments

Many entrepreneurs today want to build businesses to target the Western markets. Nothing wrong with that. That is where all the money seemingly is. But in doing so, we must not forget the market in our backyard. India is growing and changing fast, creating with it a rich set of opportunities for the ones who can see them.

The current set of entrepreneurs in India have been fed with the success stories of Infosys and Satyam in India, and Hotmail and Exodus in the US. The US is a bigger, much bigger market than India. It is also a richer market. It is the El Dorado for India. That is where we see the emergence of an entire set of companies, sponsored and encouraged by the Venture Capitalists (VCs), to target the US market through software services and IT-enabled centres.

The problem that I have with this “pure-international” model is that companies tend to ignore the domestic markets. Without a strong local market, it is not going to possible to build a healthy, enduring IT industry over the long-term. This is where investments need to be made, especially by the entrepreneurs and VC community. India by itself may not be a big market today, but we all need to work together to ensure that the market grows.

For startups, the domestic market can help build a “bread-and-butter” revenue stream. It is a market which is closer to them. Sitting in India and hoping to target the US (and other Western) markets is non-trivial and in fact very expensive requiring a strong base in those countries. An initial focus at providing solutions and services to the local market can help in creating a customer and reference base, which is so important for new companies. There are today enough Indian companies which are as technologically savvy as the best in the world which can serve as the early prospects.

The problem for many VCs of course is that targeting Indian companies does not require large amounts of capital. VC funds sitting on tens of millions of dollars cannot justify making small-scale investments. Yet, that’s perhaps what many companies need – not tens of crores (as many of the recent investments are happening), but a smaller fraction of that. This will help them get early customers, prove the concept and improvise, before they target the rest of the world. It is important to learn to swim in a smaller pool before jumping in the big pool to compete with the best of swimmers.

Tags: Tech Talk

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